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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1611 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                H. R. 1611

     To amend the Internal Revenue Code of 1986 to provide for the 
 designation of Clean Energy Business Zones and for tax incentives for 
the construction of, and employment at, energy-efficient buildings and 
            clean energy facilities, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             April 15, 2011

Mr. Grimm (for himself and Mr. Bartlett) introduced the following bill; 
which was referred to the Committee on Ways and Means, and in addition 
  to the Committee on Small Business, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
     To amend the Internal Revenue Code of 1986 to provide for the 
 designation of Clean Energy Business Zones and for tax incentives for 
the construction of, and employment at, energy-efficient buildings and 
            clean energy facilities, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Clean Energy Business Zone Act of 
2011'' and as the ``Clean Energy Empowerment Zone Act of 2011''.

SEC. 2. DESIGNATION OF CLEAN ENERGY BUSINESS ZONES AND TAX INCENTIVES 
              WITH RESPECT TO SUCH ZONES.

    (a) In General.--Chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subchapter:

              ``Subchapter Z--Clean Energy Business Zones

                         ``Part I. Designation.

                        ``Part II. Tax Benefits.

                         ``PART I--DESIGNATION

``Sec. 1400V-1. Designation of Clean Energy Business Zones.

``SEC. 1400V-1. DESIGNATION OF CLEAN ENERGY BUSINESS ZONES.

    ``(a) In General.--The Secretary may designate 40 clean energy 
business zones.
    ``(b) Consultation.--In designating such zones, the Secretary shall 
consult with--
            ``(1) the Secretary of Housing and Urban Development in the 
        case of urban areas, and
            ``(2) the Secretary of Agriculture in the case of rural 
        areas.
    ``(c) Designation Criteria.--In designating such zones, the 
Secretary shall consider the following factors:
            ``(1) Whether the area already has a clean energy 
        infrastructure or otherwise has a deteriorating conventional 
        energy infrastructure.
            ``(2) Whether the area is reliant on carbon-intensive 
        industries and, consequently, job loss is anticipated due to 
        the transition to a clean energy economy.
            ``(3) Whether the area is home to business sectors that 
        could complement new clean energy industries.
            ``(4) Whether the area has other environmental or economic 
        conditions conducive to the establishment of facilities 
        relating to the manufacture or research of clean energy or 
        clean energy technologies, including the components used in 
        such manufacture or research and the production of clean 
        energy.
    ``(d) Size.--An area may be designated as a Clean Energy Business 
Zone only if it meets the requirements of section 1392(a)(3).
    ``(e) Period Designations May Be Made.--A designation may be made 
under subsection (a) only after 2011 and before 2014.
    ``(f) Period for Which Designation Is in Effect.--Any designation 
under this section shall remain in effect during the period beginning 
on the date of the designation and ending on the close of the 10th 
calendar year beginning on or after such date of designation.

                        ``PART II--TAX BENEFITS

``Sec. 1400V-2. Tax benefits for clean energy business zones.

``SEC. 1400V-2. TAX BENEFITS FOR CLEAN ENERGY BUSINESS ZONES.

    ``(a) Wage Credit.--For purposes of section 1396--
            ``(1) In general.--Subject to the modifications in 
        paragraph (2), a Clean Energy Business Zone shall be treated as 
        an empowerment zone.
            ``(2) Modifications.--In applying section 1396 with respect 
        to Clean Energy Business Zones--
                    ``(A) In general.--In the case of qualified wages--
                            ``(i) subsection (b) thereof shall be 
                        applied by substituting `30 percent' for `20 
                        percent', and
                            ``(ii) subsection (c) thereof shall be 
                        applied by substituting `$20,000' for `$15,000' 
                        each place it appears.
                    ``(B) Qualified wages.--For purposes of 
                subparagraph (A), the term `qualified wages' means 
                qualified zone wages (as defined in section 1396(c)) 
                for services performed by the employee--
                            ``(i) in the construction of any qualified 
                        Green building, or
                            ``(ii) in any qualified clean energy 
                        facility.
                    ``(C) Coordination with basic credit.--The $15,000 
                amount in section 1396(c)(2) (without regard to this 
                subsection) shall be reduced for any calendar year by 
                the amount of wages paid or incurred during such year 
                which are taken into account in determining the credit 
                under this subsection.
            ``(3) Credit to be refundable.--So much of the credit 
        allowable by section 1396 solely by reason of this subsection 
        shall be treated as allowed under subpart C of part IV of 
        subchapter A of this chapter.
    ``(b) Expansion of Work Opportunity Credit.--
            ``(1) In general.--For purposes of section 51, a Clean 
        Energy Business Zone employee shall be treated as a member of a 
        targeted group.
            ``(2) Clean energy business zone business employee.--For 
        purposes of this subsection--
                    ``(A) In general.--The term `Clean Energy Business 
                Zone employee' means, with respect to any period, any 
                employee of a Clean Energy Business Zone business if--
                            ``(i) the principal place of abode of such 
                        employee during such period is within a Clean 
                        Energy Business Zone,
                            ``(ii) substantially all the services 
                        performed during such period by such employee 
                        for such business are performed--
                                    ``(I) in the construction of any 
                                qualified Green energy building, or
                                    ``(II) in a qualified clean energy 
                                facility, and
                            ``(iii) such employee had been employed in 
                        a carbon-intensive business at any time during 
                        the 1-year period ending on the date that the 
                        individual was first hired by the employer.
                    ``(B) Clean energy business zone business.--The 
                term `Clean Energy Business Zone business' means any 
                trade or business--
                            ``(i) which is located in a Clean Energy 
                        Business Zone, and
                            ``(ii) at least 15 percent of the employees 
                        of which are residents of a Clean Energy 
                        Business Zone.
                    ``(C) Special rules for determining amount of 
                credit.--For purposes of applying subpart F of part IV 
                of subchapter A of this chapter to wages paid or 
                incurred to any Clean Energy Business Zone business 
                employee--
                            ``(i) subsections (c)(4) and (i)(2) of 
                        section 51 shall not apply, and
                            ``(ii) in determining qualified wages, the 
                        following shall apply in lieu of section 51(b):
                                    ``(I) Qualified wages.--The term 
                                `qualified wages' means wages paid or 
                                incurred by the employer to individuals 
                                who are Clean Energy Business Zone 
                                business employees of such employer for 
                                work performed during calendar year 
                                2012.
                                    ``(II) Only first $12,000 of wages 
                                per calendar year taken into account.--
                                The amount of the qualified wages which 
                                may be taken into account with respect 
                                to any individual shall not exceed 
                                $12,000 per calendar year.
    ``(c) Clean Renewable Energy Bonds.--
            ``(1) In general.--For purposes of section 54(c)(2), the 
        term `qualified facility' includes--
                    ``(A) any qualified Green building, and
                    ``(B) any qualified clean energy facility.
            ``(2) Extension.--In the case of bonds which are clean 
        renewable energy bonds under section 54 solely by reason of 
        this subsection, section 54(m) shall be applied by substituting 
        `December 31, 2022' for `December 31, 2009'.
    ``(d) Increased Expensing Under Section 179.--
            ``(1) In general.--For purposes of section 179, the dollar 
        amount in effect under section 179(b)(1) for the taxable year 
        shall be increased by the lesser of--
                    ``(A) $250,000, or
                    ``(B) the cost of qualified section 179 Clean 
                Energy Business Zone property placed in service during 
                the taxable year.
            ``(2) Qualified section 179 clean energy business zone 
        property.--For purposes of this subsection--
                    ``(A) In general.--The term `qualified section 179 
                Clean Energy Business Zone property' means section 179 
                property (as defined in section 179(d))--
                            ``(i) which is described in section 
                        168(k)(2)(A)(i) or which is nonresidential real 
                        property or residential rental property,
                            ``(ii) substantially all of the use of 
                        which is in--
                                    ``(I) a qualified Green building or 
                                a qualified clean energy facility, and
                                    ``(II) the active conduct of a 
                                trade or business by the taxpayer in 
                                such Zone,
                            ``(iii) the original use of which in the 
                        Clean Energy Business Zone commences with the 
                        taxpayer on or after the date of the enactment 
                        of this section,
                            ``(iv) which is acquired by the taxpayer by 
                        purchase (as defined in section 179(d)) on or 
                        after such date, but only if no written binding 
                        contract for the acquisition was in effect 
                        before such date, and
                            ``(v) which is placed in service by the 
                        taxpayer during the 2-year period beginning on 
                        such date (during the 3-year period beginning 
                        on such date, in the case of nonresidential 
                        real property and residential rental property).
                    ``(B) Exceptions.--
                            ``(i) Alternative depreciation property.--
                        Such term shall not include any property 
                        described in section 168(k)(2)(D)(i).
                            ``(ii) Tax-exempt bond-financed property.--
                        Such term shall not include any property any 
                        portion of which is financed with the proceeds 
                        of any obligation the interest on which is 
                        exempt from tax under section 103.
                            ``(iii) Election out.--If a taxpayer makes 
                        an election under this clause with respect to 
                        any class of property for any taxable year, 
                        this subsection shall not apply to all property 
                        in such class placed in service during such 
                        taxable year.
            ``(3) Special rules.--For purposes of this subsection, 
        rules similar to the rules of subparagraph (E) of section 
        168(k)(2) shall apply, except that such subparagraph shall be 
        applied--
                    ``(A) without regard to `and before January 1, 
                2013' in clause (i) thereof, and
                    ``(B) by substituting `qualified Clean Energy 
                Business Zone property' for `qualified property' in 
                clause (iv) thereof.
            ``(4) Allowance against alternative minimum tax.--For 
        purposes of this subsection, rules similar to the rules of 
        section 168(k)(2)(G) shall apply.
            ``(5) Recapture.--For purposes of this subsection, rules 
        similar to the rules under section 179(d)(10) shall apply with 
        respect to any qualified section 179 Clean Energy Business Zone 
        property which ceases to be qualified section 179 Clean Energy 
        Business Zone property.
    ``(e) Exclusion of Capital Gain on Stock in Qualified Businesses.--
            ``(1) In general.--Gross income shall not include qualified 
        capital gain from the sale or exchange of any Clean Energy 
        Business Zone asset held for more than 5 years.
            ``(2) Clean energy business zone asset.--For purposes of 
        this subsection--
                    ``(A) In general.--The term `Clean Energy Business 
                Zone asset' means--
                            ``(i) any Clean Energy Business Zone 
                        business stock,
                            ``(ii) any Clean Energy Business Zone 
                        partnership interest, and
                            ``(iii) any Clean Energy Business Zone 
                        business property.
                    ``(B) Clean energy business zone business stock.--
                            ``(i) In general.--The term `Clean Energy 
                        Business Zone business stock' means any stock 
                        in a domestic corporation which is originally 
                        issued after the date of the enactment of this 
                        section if--
                                    ``(I) such stock is acquired by the 
                                taxpayer, before January 1, 2015, at 
                                its original issue (directly or through 
                                an underwriter) solely in exchange for 
                                cash,
                                    ``(II) as of the time such stock 
                                was issued, such corporation was a 
                                Clean Energy Business Zone business 
                                (or, in the case of a new corporation, 
                                such corporation was being organized 
                                for purposes of being a Clean Energy 
                                Business Zone business), and
                                    ``(III) during substantially all of 
                                the taxpayer's holding period for such 
                                stock, such corporation qualified as a 
                                Clean Energy Business Zone business.
                            ``(ii) Redemptions.--A rule similar to the 
                        rule of section 1202(c)(3) shall apply for 
                        purposes of this paragraph.
                    ``(C) Clean energy business zone partnership 
                interest.--The term `Clean Energy Business Zone 
                partnership interest' means any capital or profits 
                interest in a domestic partnership which is originally 
                issued after the date of the enactment of this section 
                if--
                            ``(i) such interest is acquired by the 
                        taxpayer, before January 1, 2015, from the 
                        partnership solely in exchange for cash,
                            ``(ii) as of the time such interest was 
                        acquired, such partnership was a Clean Energy 
                        Business Zone business (or, in the case of a 
                        new partnership, such partnership was being 
                        organized for purposes of being a Clean Energy 
                        Business Zone business), and
                            ``(iii) during substantially all of the 
                        taxpayer's holding period for such interest, 
                        such partnership qualified as a Clean Energy 
                        Business Zone business.
                A rule similar to the rule of subparagraph (B)(ii) 
                shall apply for purposes of this subparagraph.
                    ``(D) Clean energy business zone business 
                property.--
                            ``(i) In general.--The term `Clean Energy 
                        Business Zone business property' means property 
                        which is a qualified Green building if--
                                    ``(I) such property was acquired by 
                                the taxpayer by purchase (as defined in 
                                section 179(d)(2)) after the date of 
                                the enactment of this section and 
                                before January 1, 2015,
                                    ``(II) the original use of such 
                                property in the Clean Energy Business 
                                Zone commences with the taxpayer, and
                                    ``(III) during substantially all of 
                                the taxpayer's holding period for such 
                                property, substantially all of the use 
                                of such property was in a Clean Energy 
                                Business Zone business of the taxpayer.
                            ``(ii) Special rule for buildings which are 
                        substantially improved.--
                                    ``(I) In general.--The requirements 
                                of subclauses (I) and (II) of clause 
                                (i) shall be treated as met with 
                                respect to--
                                            ``(aa) property which is 
                                        substantially improved by the 
                                        taxpayer before January 1, 
                                        2015, and
                                            ``(bb) any land on which 
                                        such property is located.
                                    ``(II) Substantial improvement.--
                                For purposes of subclause (I), property 
                                shall be treated as substantially 
                                improved by the taxpayer only if, 
                                during any 24-month period beginning 
                                after December 31, 1999, additions to 
                                basis with respect to such property in 
                                the hands of the taxpayer exceed the 
                                greater of $5,000 or an amount equal to 
                                the adjusted basis of such property at 
                                the beginning of such 24-month period 
                                in the hands of the taxpayer.
                    ``(E) Treatment of clean energy business zone 
                termination.--The termination of the designation of the 
                Clean Energy Business Zone shall be disregarded for 
                purposes of determining whether any property is a Clean 
                Energy Business Zone asset.
                    ``(F) Treatment of subsequent purchasers, etc.--The 
                term `Clean Energy Business Zone asset' includes any 
                property which would be a Clean Energy Business Zone 
                asset but for subparagraph (B)(i)(I), (C)(i), or (D)(i) 
                (I) or (II) in the hands of the taxpayer if such 
                property was a Clean Energy Business Zone asset in the 
                hands of a prior holder.
                    ``(G) 5-year safe harbor.--If any property ceases 
                to be a Clean Energy Business Zone asset by reason of 
                subparagraph (B)(i)(III), (C)(iii), or (D)(i)(III) 
                after the 5-year period beginning on the date the 
                taxpayer acquired such property, such property shall 
                continue to be treated as meeting the requirements of 
                such paragraph; except that the amount of gain to which 
                paragraph (1) applies on any sale or exchange of such 
                property shall not exceed the amount which would be 
                qualified capital gain had such property been sold on 
                the date of such cessation.
            ``(3) Clean energy business zone business.--For purposes of 
        this subsection, the term `Clean Energy Business Zone business' 
        means any trade or business if--
                    ``(A) all buildings located in any Clean Energy 
                Business Zone which are owned or occupied by such trade 
                or business are qualified Green buildings or qualified 
                clean energy facilities, and
                    ``(B) such business would be an enterprise zone 
                business (as defined in section 1397C) determined--
                            ``(i) by substituting `80 percent' for `50 
                        percent' in subsections (b)(2) and (c)(1) of 
                        section 1397C,
                            ``(ii) by substituting `15 percent' for `35 
                        percent' in subsections (b)(6) and (c)(5) of 
                        section 1397C, and
                            ``(iii) by treating no area other than the 
                        Clean Energy Business Zone as an empowerment 
                        zone or enterprise community.
            ``(4) Other definitions and special rules.--
                    ``(A) Qualified capital gain.--Except as otherwise 
                provided in this paragraph, the term `qualified capital 
                gain' means any gain recognized on the sale or exchange 
                of--
                            ``(i) a capital asset, or
                            ``(ii) property used in the trade or 
                        business (as defined in section 1231(b)).
                    ``(B) Gain before enactment or after 2014 not 
                qualified.--The term `qualified capital gain' shall not 
                include any gain attributable to periods before the 
                date of the enactment of this section or after December 
                31, 2014.
                    ``(C) Certain gain not qualified.--The term 
                `qualified capital gain' shall not include any gain 
                which would be treated as ordinary income under section 
                1245 or under section 1250 if section 1250 applied to 
                all depreciation rather than the additional 
                depreciation.
                    ``(D) Intangibles and land not integral part of 
                clean energy business zone business.--The term 
                `qualified capital gain' shall not include any gain 
                which is attributable to real property, or an 
                intangible asset, which is not an integral part of a 
                Clean Energy Business Zone business.
                    ``(E) Related party transactions.--The term 
                `qualified capital gain' shall not include any gain 
                attributable, directly or indirectly, in whole or in 
                part, to a transaction with a related person. For 
                purposes of this paragraph, persons are related to each 
                other if such persons are described in section 267(b) 
                or 707(b)(1).
            ``(5) Certain rules to apply.--Rules similar to the rules 
        of subsections (g), (h), (i)(2), and (j) of section 1202 shall 
        apply for purposes of this subsection.
            ``(6) Sales and exchanges of interests in partnerships and 
        s corporations which are clean energy business zone 
        businesses.--In the case of the sale or exchange of an interest 
        in a partnership, or of stock in an S corporation, which was a 
        Clean Energy Business Zone business during substantially all of 
        the period the taxpayer held such interest or stock, the amount 
        of qualified capital gain shall be determined without regard 
        to--
                    ``(A) any gain which is attributable to real 
                property, or an intangible asset, which is not an 
                integral part of a Clean Energy Business Zone business, 
                and
                    ``(B) any gain attributable to periods before the 
                date of the enactment of this section or after December 
                31, 2014.
    ``(f) Expensing of Portion of Cost of Qualified Clean Energy 
Facilities.--
            ``(1) In general.--A taxpayer may elect to treat the cost 
        of any qualified clean energy facility property as an expense 
        which is not chargeable to capital account. Any cost so treated 
        shall be allowed as a deduction for the taxable year in which 
        the property is placed in service.
            ``(2) Maximum amount of deduction.--
                    ``(A) In general.--The deduction under paragraph 
                (1) for any taxable year shall not exceed $1,000,000.
                    ``(B) Deduction allowed for only 5 years.--A 
                deduction shall be allowed under this paragraph for any 
                qualified clean energy facility property only for the 
                taxable year during which the qualified clean energy 
                facility is placed in service and for the first 4 
                taxable years thereafter.
            ``(3) Qualified clean energy facility property.--For 
        purposes of this subsection, the term `qualified clean energy 
        facility property' means any property--
                    ``(A) with respect to which depreciation (or 
                amortization in lieu of depreciation) is allowable, and
                    ``(B) which is installed on or in any qualified 
                clean energy facility.
            ``(4) Basis reduction.--For purposes of this subtitle, if a 
        deduction is allowed under this subsection with respect to any 
        qualified clean energy facility property, the basis of such 
        property shall be reduced by the amount of the deduction so 
        allowed.
            ``(5) Termination.--This subsection shall not apply to 
        property placed in service after December 31, 2014.
    ``(g) Definitions.--For purposes of this section--
            ``(1) Qualified green building.--
                    ``(A) In general.--The term `qualified Green 
                building' means any building which is located in a 
                Clean Energy Business Zone and which meets the 
                standards prescribed by the Administrator of the 
                Environmental Protection Agency under subparagraph (B) 
                for such building.
                    ``(B) Standards.--The Administrator of the 
                Environmental Protection Agency shall develop and 
                implement, in consultation with the Secretary of 
                Energy, standards for a national energy and 
                environmental building retrofit policy for single-
                family and multifamily residences. The Administrator 
                shall develop and implement, in consultation with the 
                Secretary of Energy and the Director of Commercial 
                High-Performance Green Buildings, standards for a 
                national energy and environmental building retrofit 
                policy for nonresidential buildings. The programs to 
                implement the residential and nonresidential policies 
                based on the standards developed under this 
                subparagraph shall together be known as the Retrofit 
                for Energy and Environmental Performance (REEP) 
                program.
            ``(2) Qualified clean energy facility.--The term `qualified 
        clean energy facility' means any facility which is located in a 
        Clean Energy Business Zone and which relates to the manufacture 
        or research of clean energy or clean energy technologies, 
        including the components used in such manufacture or research 
        and the production of clean energy.''.
    (b) Clerical Amendment.--The table of subchapters for chapter 1 of 
such Code is amended by adding at the end the following new item:

            ``subchapter z. clean energy business zones.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.

SEC. 3. WAIVER OF SBA LOAN FEES.

    (a) Section 7(a) Loans.--Paragraph (18) section 7(a) of the Small 
Business Act is amended by adding at the end the following new 
subparagraph:
                    ``(C) No fee permitted for clean energy 
                construction loans.--No fee may be imposed under this 
                paragraph with respect to any loan made before January 
                1, 2022, for the construction of any qualified Green 
                building (as defined in section 1400V-2(g) of the 
                Internal Revenue Code of 1986) or any qualified clean 
                energy facility (as defined in such section).''.
    (b) Section 504 Loans.--Paragraph (2) of section 503(d) of the 
Small Business Investment Act of 1958 is amended by adding at the end 
the following new sentence: ``No fee may be imposed under this 
paragraph with respect to any loan made before January 1, 2022, for the 
construction of any qualified Green building (as defined in section 
1400V-2(g) of the Internal Revenue Code of 1986) or any qualified clean 
energy facility (as defined in such section).''
                                 <all>
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